LONG TERM PLANNING FOR YOUR LEGACY
Whether you are an individual or a business owner, planning for the long term is essential for ensuring your legacy. Having your plan in place will mitigate the costs and attorney fees that would be incurred when there is no estate plan in place. Each estate planning & estate litigation attorney at Artiano & Associates has extensive experience helping design the right estate plans and administrating Trusts for their clients. In addition, we also represent clients, whether a Trustee or a Beneficiary, when Trust or Probate matters require Court intervention.
PROVEN METHODS TO PRESERVE YOUR WEALTH
Having implemented a wide variety of proven plans over time, we know the best approach to accomplish your specific estate plan goals. A basic estate plan may be adequate for some individuals, whereas more sophisticated planning would be required for couples or individuals with diverse business interests. No matter what your situation, we know the right plans and financial instruments to put in place to maximize the preservation of your estate for your heirs, while minimizing estate taxes. We help our clients with:
- Creating detailed trusts, whether Revocable or Irrevocable Trusts
- Trust administration
- Business succession plans
- Buy/sell agreements
- Wills, Trusts and Power of Attorneys for Healthcare and Finances
- Related Trust or Probate Litigation
A PERSONAL TOUCH
Unlike many firms, when you meet with us, you are meeting with specialists in estate planning who will directly handle your case, not an assistant or a paralegal. We spend time with you one-on-one, in most cases, at a fixed fee, so you have control over your budget and your options, with no surprises. We are responsive, knowledgeable, and have the expertise to guide you to the results that best serve you and your family.
OUR ENTIRE FIRM IS BEHIND YOU
Every issue in an estate planning case has the potential to impact other parts of your business or your life. Because we offer a variety of legal services that complement each other, we look at your business and your life plans together. Should it become necessary, we have experienced attorneys with different specialties at your disposal without duplication of effort to resolve any estate plan, Trust administration or Trust or Probate Litigation problem.
CASE STUDY: PRESERVING WEALTH BY TAKING IT OUT OF THE ESTATE
Once an estate of a husband and wife reaches the $27.22 million threshold (this is the Lifetime Exemption from Estate and Gift taxes at the Federal level), the excess over the $27.22 million becomes subject to an expensive estate tax (40%). We will show our clients alternate ways to preserve their wealth by holding some of the assets in an Irrevocable Trust while having the benefit of the income and principal from those assets. This type of plan will provide a hedge against future changes in the law where the Lifetime exemption may be reduced by Congressional action or inaction.
In one such case (at a time when the threshold was at $25 million), we helped a married couple sell some of the stock in their family corporation to irrevocable trusts, which represented 40% of their wealth. This reduced their total wealth from $25 million to $15 million, bringing them under the $25 million threshold. This would allow for increases in the value of their business as they continued to increase their business for the next generation. The remaining $15 million was protected from the estate tax, while leaving the $10 million, and any subsequent increase in value, in the irrevocable trusts safeguarded from estate tax for their family. The clients have children from prior relationships, and now their assets are well positioned for distribution to their heirs when the time comes.
PRACTICE AREAS
- Business Law and Litigation
- Employment Law and Employment Litigation
- Estate Planning and Trust Administration
- Trust and Probate Litigation
FAQs
No absolute rules exist for determining when a living trust should or should not be used in estate planning, as the type of assets owned, family situations, personal desires of clients, net worth, tax ramifications, complexity of the plan of distribution, and various other factors must all be considered in designing any estate plan. However, some fact situations do warrant the use of a living trust more frequently than others. Following are some things to consider regarding the establishment of a revocable living trust:
- A Revocable Living Trust Avoids Probate
- In most cases, if you own assets that are not in a Trust, upon your death your estate must be probated. This is true even if you have a Will. The probate process typically takes a minimum of 6 months, and many times much longer, to pass the assets in your estate to your heirs.
- The probate process is expensive. Probate fees are set in accordance with California Probate Code §10800, and they are based upon the gross value of your estate, not the net value. The fees for an estate with a gross value of $2,000,000 would be $60,000, half payable to the attorney and half payable to the personal representative. By comparison the cost of a revocable living trust, wills, and power of attorneys for both healthcare and finance for a married couple would be between $4,950 and $6,000, depending on the complexity of your estate. The cost would be less for an unmarried person.
- A Revocable Living Trust Provides for the Allocation and Distribution of the Estate
- Unlike a Will, a Trust established for a married couple can ensure that the estate of the first spouse to die passes to his chosen heirs, and not someone else. A Will does not provide that certainty.
- Upon the decedent’s death, a revocable living trust would serve to allocate and distribute the decedent’s estate in a matter of a few weeks to the named beneficiaries, and not months or years as would occur in a probate.
- In a family consisting of children from more than one marriage, children with special needs or addictions or heirs that you do not want to inherit from you, a Trust provides assurance that your wishes will occur.
- If you have life insurance on your life, you can designate your Trust as the beneficiary of the life insurance policy upon your death. So, if you have minor children this will ensure they receive the proceeds from the policy pursuant to your instructions in the Trust. Without a Trust either a guardian or custodian would need to be appointed by the court to handle the proceeds.
- Eliminating or Minimizing Estate and Capital Gains Taxes
- Currently in tax year 2024, the lifetime exclusion for estate taxes is $13,610,000 for a single person and $27,220,000 for a married couple. The amount increases every year based upon an inflation adjustment. This means that if the value of your net estate is less than these amounts, no estate taxes will be imposed whether you have a Trust or not. However, if you are married, do not have a trust and the value of your estate exceeds $27,220,000, estate taxes will be imposed at the rate of 40% of the amount over the exclusion amount on the death of the first spouse to die. A Trust can ensure that no estate tax is imposed when the first spouse dies. It should be noted that if Congress does not act to extend the lifetime exemption by the end of 2025, the exemption amount for a married couple will reduce to $10,000,00 ($5,000,000 for each spouse).
- If your estate is less than $27,220,000, a Trust would preserve an added exclusion for the surviving spouse, thereby serving to eliminate or lower to the extent permitted by law, any estate tax upon the death of the surviving spouse.
The difference is that an estate plan applies to an individual, allowing them to dictate how their assets and property will be distributed to their beneficiaries after their death. It’s possible to configure an estate plan in various ways, and there are distinct advantages to certain types of estate plans for certain individuals.
Business succession planning, on the other hand, refers to how your business will be operated after your death. A sole proprietorship is handled like personal property and will be passed to beneficiaries according to the stipulations in your estate plan. Stock owned in a family business or closely held corporation (“C or S Corp”), or limited liability company (“LLC”) may be held in the name of your Trust so it can pass to your heirs without the need for Court intervention. If the business interest must be probated with the Court to pass it to your heirs, this will result in delays and attorney fees and costs to be incurred which will exceed by 10x the amount to be spent to have an Estate plan in place with a Trust holding your assets during your lifetime.
For a family business owner, the most important documents for a business succession plan include your Trust and Will along with other possible documents. A Trust and Will can outline your intentions for the business, whether you want to keep it in the family or allow for its sale.
A trust allows the trust owner to make specific stipulations for the distribution of assets and business succession following their death, and there are various types of trusts you could create that each provides distinct benefits.
If you have a business partner, you should have a buy-sell agreement executed between the business owners to coincide with your Trust and Will on how to handle the distribution of your ownership of the business after your death.
When you give someone your power of attorney as part of your estate plan, they will have the authority to make binding legal decisions in your name under certain conditions, typically once you become unable to make such decisions yourself.
For business owners, it is vital that you not only have a medical power of attorney to determine who will make medical decisions for you, but also have a financial power of attorney to act as the agent of your business. As your estate planning & estate litigation lawyer we can assist you in choosing someone who holds the correct professional background and who possesses a deep understanding of your business operations to handle this responsibility.
A Buy-Sell Agreement can help prevent complex business litigation and enable a smoother transition to new leadership after your death.
When a controlling partner exits a business upon their death, the buy-sell agreement will stipulate how the remaining partners may assume control of the decedent’s share of the business. The purpose of this agreement is to minimize the potential for disputes between the remaining partners and the decedent’s family and ensure the business can continue operation with as little disruption as possible.
The main objective of estate planning for an individual and/or a business owner is to prevent their beneficiaries from facing a lengthy, expensive, and stressful litigation process after their death. However, even the most carefully crafted and comprehensive estate plans and business succession plans may not avoid disputes among beneficiaries, which can arise for many reasons.
Our estate planning and estate litigation lawyers can help you resolve any such issues that unexpectedly arise as quickly as possible. Artiano & Associates has years of experience with complex estate litigation, and we are fully prepared to provide efficient legal counsel so you can resolve any such dispute quickly. We use mediation as a tool to obtain resolution early in a case before thousands of dollars are unnecessarily spent by the parties.
Yes, in California, it is possible for estate administration or estate litigation to overlap with issues that must be resolved by applying family law rules to the matter involved in the Trust administration. For example, if your personal estate plan includes a community and separate property acquired during the marriage or brought into the marriage and which is included in the estate plan it will be necessary to determine how the property in the trust should be characterized for allocation among the Survivor’s and By-Pass (decedent’s) trusts when the first spouse dies. It is possible for many family law matters to arise out of estate administration.
Probate is the formal legal process of estate administration in public court. If an individual dies without having a legally enforceable estate plan, which includes a Trust in place and the Trust is funded with the assets owned by the decedent, probate is required to settle their outstanding debts and distribute their assets to their beneficiaries.
Probate is notoriously time-consuming, stressful, and tedious, and the process follows California’s intestate succession law unless there is a Will. For business owners, probate can be incredibly problematic when it comes to their business interests, and one of the main goals of proper estate planning and business succession planning is to avoid probate as much as possible and have your assets held in the name of your Trust. See the discussion above regarding “When do I need a Trust?”
If someone contests an estate plan or business succession plan, litigation could ensue. It is important to remember that no matter how detailed you are in your personal estate plan and/or your business succession plan, there is always a chance that unexpected disputes could arise among your beneficiaries or the other stakeholders in your business.
An interested party may claim that an element of your estate plan or succession plan is unlawful, incomplete, or that it was amended without your willful consent in some way. Having an experienced estate planning & estate litigation lawyer assist with such an issue is the optimal way to resolve such problems, and Artiano & Associates will craft a plan that minimizes the chances for disputes to arise after your death. This would include a “no contest” clause which would provide that the contestant will be disinherited if they challenge the Will or Trust, and they lose their challenge.
PROTECT YOUR FUTURE
Artiano & Associates has the ability and experience to help you plan for the long term. Call us at 310-543-1240 or email us at info@artianolaw.com.
